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The basics
A taxable holding sold for less than its remaining basis realizes a loss. The model adds that loss to a pool available against modeled capital gains. Enter any pool you already hold from before the plan under Capital losses in Default settings; new plans inherit it.
A fall in market value alone does not realize a loss. The holding must be sold.
Illustrative numbers
Use part of an existing pool
Opening loss carryforward$12,000
Modeled gain to offset$5,000
Unused pool afterward$7,000
The offset removes that $5,000 gain from the modeled taxable gain base. The $7,000 remains available for later years.
Calculation transparency
How it works in MoneyWhatIf
- 01
Sales below basis realize losses as part of the ordinary funding calculation. They do not need a separate harvesting switch to become losses.
- 02
The pool combines the opening carryforward and new realized losses, nets applicable gains, and carries the unused balance without an expiry date.
- 03
The current implementation does not deduct unused capital losses from ordinary income. A remaining pool therefore does not create an annual salary or pension deduction.
- 04
Washington’s modeled capital-gains excise uses the same loss-netted brokerage gain base for these sales. Inspect the actual tax breakdown rather than assuming every government grants the same deduction.
Keep in mind
Model limits
The pool is a simplified aggregate, not a tax-lot ledger with short-term and long-term carryforward categories.
The model does not test wash-sale rules or prescribe real-world tax-loss trades.
This explanation documents the planning model. It is educational, not individualized tax, legal, Medicare, or investment advice.
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The words behind it
Related financial terms
Plain-English definitions, with 2026 figures and worked examples, from the financial terms glossary.